COMFORTABLE LEVEL
PANTECH Group Holdings Bhd is upbeat on its performance this year, says executive director Adrian Tan. The company, which manufactures pipes, valves and fittings and provides maintenance services for the oil and gas industry, sees opportunities in both up
PANTECH Group Holdings Bhd is buoyed by an upturn in the oil and gas (O&G) sector as this will potentially expedite its revenue stream.
Executive director Adrian Tan said the company’s performance was always in sync with the recovery of the sector.
Pantech has about 70 per cent business exposure in the O&G sector.
“This year’s business should pick up because the O&G sector is on uptrend,” Tan told NST Business recently.
With presence in 68 countries, the Pantech group is a specialist in the manufacturing and trading of pipes, valves and fittings (PVFs) and other components for the O&G sector.
Tan said the downstream segment had quickly picked up following the increase in oil prices to between US$70 and US$80 (RM279.30 and RM319.20) per barrel currently.
“It (oil price) is quite stable and now at comfortable level. We see a lot of new projects that are ongoing for the upstream segment. We are involved in both upstream and downstream segments, supplying projects that require pipes and fittings.”
Tan said Pantech would not be badly affected by oil price fluctuations as it could still rely on its maintenance business.
“Projects for the downstream still need to undergo maintenance work. We use oil as a benchmark. Back in 2016, the price dropped below US$30 — that was the time most players did not embark on their oil exploration activities. But the downstream segment still had to run,” he said.
Tan believed the Refinery and
Petrochemical Integrated Development project in Pengerang, Johor, would continue to deliver substantial revenue to the company.
“The project is at the tail end. We are still receiving orders for it. Even after it is completed by the end of financial year 2019, there will still be maintenance requiring for PVFs,” he said.
Tan said while 70 per cent of Pantech’s business dealt with O&G activity, the remaining 30 per cent came from palm oil mills and other chemical plants.
About 40 per cent of the company’s O&G business is for the maintenance segment and the balance in upstream and downstream activities.
Tan said Pantech had allocated about RM40 million in capital expenditure (capex) for its financial year ending February 28 2019 to increase plants capacities and build a new warehouse.
“Two of our manufacturing plants — Pantech Stainless & Alloy Industries Sdn Bhd and Pantech Steel Industries Sdn Bhd — are running in full swing. Currently, we produce about 180 tonnes of stainless steel fittings monthly. We hope to increase this to 250 tonnes,” he said.
The total stainless steel pipe and fitting manufacturing capacity will be expanded to 16,500 tonnes from 14,400 tonnes annually after the investment.
Pantech also plans to increase its carbon steel fitting capacity to 22,000 tonnes from 21,000 tonnes per year.
The capex will also be used to build a new warehouse for the company’s manufacturing and trading activities and buy additional equipment.
Tan said Pantech wanted to automate its manufacturing process to maximise productivity and improve efficiency.
“We are still (doing) feasibility study to automate our operation,” he said, adding that only certain processes would require automation.